Student Name Student ID Number
Course Abbreviation and Number ACC 231
Course Title Uses of Accounting Information V1
Class # 81718
Professor Mindy Wolfe
Date of Exam September 9, 2016
Time Period Start time: 3:05 End time: 3:45
Number of Exam Pages 9 (including this cover sheet)
Additional Materials Allowed Cordless calculators may be used. The calculator must be standalone
with no communication or data storage features.
Both the examination paper and multiple choice card must be submitted.
1
1. Liabilities are defined as:
A. future economic benefits of a company.
B. earnings retained in the business.
C. stockholders' claims to assets.
D. amounts owed to lenders or creditors.
2. Assets are defined as:
A. stockholders' claims to assets.
B. economic resources of a company.
C. amounts owed to others.
D. earnings retained in the business.
3. Which of the following does NOT describe Stockholders' Equity?
A. Money lent to a business
B. Money invested in a business by its owners
C. The owners' claim on the assets of a company
D. Profits retained in the business
4. Which of the following is NOT an asset?
A. Buildings
B. Net income
C. Cash
D. Inventory
5. Net income is defined as:
A. expenses less revenue.
B. revenue plus expenses.
C. revenue less assets.
D. revenue less expenses.
2
6. What do we call amounts of money borrowed from lenders?
A. Asset
B. Expense
C. Liability
D. Revenue
3
7. Stockholder's Equity represents:
A. an initial investment of cash by the owners.
B. a fair distribution of wealth in the firm.
C. retention of profits by a firm.
D. all of the above.
E. A and C only.
8. A business may be either a for − profit business or a not − for − profit business.
True
False
9. A business with one owner is called a sole proprietorship and it must be a service business.
True
False
10. Shareholders must pay income tax on the dividends they have received from a corporation.
True
False
11. A limited liability company (LLC) is a legal entity like a corporation, but the income is taxed like a sole proprietorship or
partnership.
True
False
12.
13.
Which of the following is a disadvantage of the corporate form of business?
A. Limited liability
B. Limited resources
C. Double taxation
D. Ease of raising capital
4
Which type of organization has stockholders?
A. Limited liability companies
B. Sole proprietorships
C. Partnerships
D. Corporations
14.
15.
Which of the following business forms is similar to a corporation in regard to owner liability?
A. All businesses are the same with regard to owner liability.
B. Sole proprietorship
C. Partnership
D. Limited liability company
Which would NOT be an example of a for − profit business?
A. Red Cross
B. Red Robin
C. Petsmart
D. Toys 'R Us
16. Generally Accepted Accounting Principles (GAAP) are the rules and guidelines governing accounting.
True
False
17. Due to the globalization of business, U.S. companies are no longer required to follow GAAP.
True
False
18.
19.
5
20.
Ronald opens his business by investing $12,000. How does this affect the accounting equation?
A. Increase in Liabilities; increase in Stockholders' Equity.
B. Decrease in Assets; increase in Stockholders' Equity.
C. Increase in Assets; decrease in Stockholders' Equity.
D. Increase in Assets; increase in Stockholders' Equity.
Trina borrowed money for her business from a local bank. What accounts will be affected?
A. Accounts Payable and Revenue
B. Cash and Notes Payable
C. Cash and Accounts Payable
D. Accounts Receivable and Revenue
An increase in revenues would have which of the following effects on the accounting equation?
A. Increase Common Stock
B. Decrease Stockholders' Equity
C. Increase Liabilities
D. Increase Stockholders' Equity
21.
22.
Which of the following is a written promise to pay?
A. Dividend payable
B. Account payable
C. Note payable
D. Account receivable
A company has Liabilities of $23,800 and Stockholders' Equity of $56,900. How much does the company have in Assets?
A. $56,900
B. $23,800
C. $33,100
D. $80,700
23. Information for the Alaska Alehouse's first month of operations is presented below:
Revenues $22,000
Expenses 13,000
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Retained
Earnings
1/31/16
7,000
How much did Alaska Alehouse pay out in dividends?
A. $2,000
B. $0
C. $7,000
D. Cannot be determined from given information
24.
25.
26.
Which of the following is a disadvantage of the corporate form of business?
A. Limited liability
B. Double taxation
C. Ease of raising capital
D. Limited resources
Which of the following business forms is similar to a corporation in regard to owner liability?
A. All businesses are the same with regard to owner liability.
B. Partnership
C. Sole proprietorship
D. Limited liability company
The account "Cash" began with a zero balance and then had the following changes: increase of $270, decrease of
$75, increase of $115 and a decrease of $35. The final balance is a:
A. credit balance of $110.
B. credit balance of $275.
C. debit balance of $275.
D. debit balance of $385.
27. The account "Notes Payable" began with a zero balance and then had the following changes: increase of $500, increase
of $400, decrease of $700, and an increase of $260. The final balance is a:
A. credit balance of $700.
B. credit balance of $460.
C. debit balance of $460.
D. debit balance of $1,160.
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28.
29.
30.
The unadjusted trial balance for Supplies shows a $634 balance. If $532 of supplies were used during the period, the
adjusted balance for Supplies would be a:
A. $102 credit.
B. $532 credit.
C. $532 debit.
D. $102 debit.
The unadjusted trial balance shows a $15,000 balance for Prepaid Rent. At the end of the year, $3,000 of the rent had
been used. The adjusted trial balance reflects a balance for Prepaid Rent of:
A. $3,000 credit.
B. $12,000 credit.
C. $12,000 debit.
D. $3,000 debit.
The unadjusted trial balance shows Accumulated Depreciation − Computer with a credit balance of $220. After
determining depreciation expense is $125, the adjusted balance in the Accumulated Depreciation account for the
computer will be a:
A. $125 debit.
B. $95 debit.
C. $345 credit.
D. $220 credit.
31.
32.
The adjusted balance for Supplies was $403. The unadjusted balance for Supplies was $539. The amount of supplies
expense would be recorded as a:
A. $136 debit.
B. $403 debit.
C. $136 credit.
D. $539 debit.
Every entry in the general journal should include all of the following EXCEPT:
A. a brief description of the transaction.
B. the balance of the accounts affected.
C. the amounts of debits and credits.
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.
33.
34.
35.
36.
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37.
38.
39.
Where is the best place for a company's accountant to find the information necessary to review the activity in the cash
account?
A. General journal
B. Trial balance
C. Bank statement
D. General ledger
GAAP tries to ensure that accounting information is:
A. accurate, relevant, and factual.
B. relevant, understandable, and reliable.
C. understandable, realizable, and error − free.
D. reliable, historical, and accurate.
The guidelines that describe the rules of accounting are called:
A. SEC.
B. FASB.
C. GAAP.
D. GAAS.
If a business records expenses when paid, the company is using the:
A. cash basis of accounting.
B. accrual basis of accounting.
C. adjustment basis of accounting.
D. the expense basis of accounting.
The matching principle in accounting requires the matching of:
A. revenue earned with the assets used less the liabilities incurred.
B. revenue earned with the liabilities used to produce the revenue.
C. revenue earned with the expenses incurred to produce the revenue.
D. revenue earned with the assets used to produce the revenue.
The revenue recognition principle states that revenues should be recognized
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hen
cas
h
rec
eive
d.
B. when they are earned.
C. within six months of receiving cash.
D. when they are earned, if cash will be received within the year.
An example of a contra − account would be Accumulated Depreciation.
True
False
40.
41.
42.
43.
Recording Unearned Subscriptions Revenue would be an example of a(n):
A. deferred expense.
B. deferred revenue.
C. accrued expense.
D. accrued revenue.
Recording Wages Payable would be an example of a(n):
A. deferred expense.
B. deferred revenue.
C. accrued expense.
D. accrued revenue.
A piece of equipment cost $900 and has a salvage value of $200. If it has a 10 − year life, the annual depreciation
expense under straight − line depreciation would be:
A. $200
B. $70
C. $700
D. $90
Assets, Liabilities and Retained Earnings are permanent accounts that are NOT closed at the end of the accounting
period.
True
False
44.
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45.
The account to which revenue and expenses are closed is called:
A. Cash.
B. Sales.
C. Retained Earnings.
D. Common Stock.
Revenues are:
A. additions to dividends.
B. subtractions from Retained Earnings.
C. subtractions from net income.
D. additions to Retained Earnings.
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46.
entries transfer net income or net loss and dividends to the Retained Earnings account.
A. Timely
B. General
C. Adjusting
D. Closing
47.
48.
Monet's Paint Co. had closing entries which included $7,300 of revenues, $1,000 of wages expense, and $500 of
utilities
expense. The entry to retained earnings is:
A. Credit $5,800
B. Credit $7,300
C. Debit $7,300
D. Debit $5,800
Liner Company had closing entries which included $15,000 in Revenue, $10,000 in wages expense, and $6,000 in utilities
expense. The entry to retained earnings was a:
A. Credit $16,000
B. Debit $16,000
C. Credit $1,000
D. Debit $1,000
49. You have Version 1. Please fill in A on your scantron.
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September 9, 2016 ACC 231 12
